One culprit: The People’s Bank of China is showing that it’s very disinclined to step in and smoothe over tight liquidity conditions.

Instead it’s telling the banks to deal with their own mess.

Nomura’s Zhiwei Zhang passes allong the message from the PBOC in a brief note

The guidance note stated that “overall bank liquidity conditions are at a reasonable level” and asked banks to “prudently manage liquidity risks that have resulted from rapid credit expansion”, “appropriately contain the pace of loans and bill financing” and “utilize the stock of money and credit to support the economy”. We believe these statements suggest that the central bank’s policy stance remains tight. The decision to put this note on its website suggests the PBoC wants to reiterate its policy stance.
Read more: http://www.businessinsider.com/heres-the-message-from-the-peoples-bank-of-china-that-sent-stocks-cratering-2013-6#ixzz2X8V96Ukp

From Caijing, google translated. We hope the gist of the narrative in Mandarin is far less scary, because if the translation is even remotely accurate, then all hell may be about to break loose in China.

From Caijing: Bank of China, Bank of suspension of transfers morning counters were unable to apply for online banking

Update: Customer service said, now silver futures transfer service has been fully suspended, online banking, the counter can not be handled, and now has the background system response, recovery time is not yet known

Following the ICBC, the Bank of China also go awry again. This morning, the Bank of China Bank moratorium on transfers, online banking, counters are inoperable.

10:00 many, many people began to receive messages sent to the Bank of China, “the end result of the Bank of China Bank failures, bank customers can not carry on through the Bank transfers, please Bank online banking, bank counter or use of other bank transfer system, Bank system will be restored promptly notify you.” large number of transfer business banking needs of the people turned to online banking, counter, but according to the instructions of the public still found text messages can not handle.

Even before the open today, it was clear that few – except bears and shorts – were satisfied by Mr. Bernanke’s remarks made yesterday during the press conference that followed the FOMC meeting.

A quick scan of one of my favorite financial apps, provided for free from Bloomberg, showed broad selling everywhere across nearly every asset tracked in the app. Commodities, bonds, foreign markets were all in the red. This is not a common occurrence. Usually money flows from one asset to another, yet today there seems to be very little interest in buying anything (although lean hogs and lumber futures are flirting with gains).

It was this lack of buying interest that reminded me of a recent article, published by The New York Times on May 31, titled “Off the Charts: Sign of Excess?”.

Mutual and exchange-traded funds hemorrhaged a record volume of bonds in June, according to a fresh report by TrimTabs Investment Research, as investors fear the impact of a scaling back of the U.S. Federal Reserve’s bond purchasing program.

“Fund investors are unloading bonds at a record pace. The combined outflow of $47.2 billion is the highest in any month on record, handily eclipsing the previous record of $41.8 billion in October 2008,” said TrimTabs CEO David Santschi, in a report released on Monday.

Efforts by the world’s “overburdened” central banks to stabilize financial markets have allowed governments to delay necessary overhauls to their economies and banking systems, the Bank for International Settlements said in its annual report Sunday.

The warning from the BIS, a consortium of the world’s top central bankers, comes as uncertainty over the course of monetary policy, particularly in the U.S., has led to a steep selloff in equities and government bonds, threatening to touch off a new bout of global financial distress.

“It is becoming increasingly clear that central banks cannot do ‘whatever it takes’ to return still-sluggish economies to strong and sustainable growth,” said Stephen Cecchetti, head economist at BIS.

“Whatever it takes” emerged last year as a powerful verbal intervention by European Central Bank President Mario Draghi to signal the bank’s willingness to use its balance sheet, within its mandate, to prop up bond markets of ailing southern European countries if needed to preserve the euro.